Construction Services
Construction Lending Solutions
Cocamar Construction Lending Solutions (CCLS) offers First-Call Resolution™ to the construction lending industry. With just one call, you can access a comprehensive menu of CCLS services — from construction origination through loan servicing, inspection services, field services, loss mitigation, and rollover from a construction loan to permanent financing. These services will help you increase efficiencies, turn-times and profits by streamlining processes, navigating challenges, identifying and mitigating risks.
Our broad menu of services can be selected in bundles or as individual services. For portfolio lenders, CCLS recommends a complete review of your construction portfolio to assist you with determining which services best address your needs.
Builder Acceptance and Review
Lenders go to great lengths to verify information on the people borrowing their funds. However, they often neglect to verify information on one of the most important parties in the construction lending process: the builder. Cocamar can perform a complete credit review of the builder, confirming data the builder has provided, which enables you to make a complete and informed credit decision. Prior to loan closing, a review and assessment of the builder application information is performed to determine if a contractor is qualified and credit-worthy to build the project. Cocamar monitors the builder's licenses, insurance, credit and litigation status after closing through its tracking system while the project is being built.
- The following items are typically included in Cocamar's builder and acceptance review process:
- Client references
- Subcontractor and Supplier references
- Criminal Background check/report
- Drivers License and W-9
- Builder/Contractor's Licenses
- Insurance Policy - policy limits, deductibles and effective and expiration dates
- Litigation and Business Credit Report
Budget Reviews
Lenders use appraisers to certify the value of the property during the approval process of a construction loan. However, they often overlook validating the budget provided by the builder. Cocamar validates the budget prior to closing which helps lenders, borrowers and builders to avoid budget shortages before they ever happen.
A comprehensive project review will be performed to compare the plans and specifications of the house to the contract, budget and appraisal information. This process will encompass a determination of the feasibility of the project, review key construction factors and stages of project, and review the cost estimation of projects versus proposed budget based on market value.
Contractor Replacement With Bid Evaluation
Should the lender or homeowner find themselves in a situation where the builder/contractor can not complete the project or has abandoned the project, Cocamar can provide lenders/homeowners with the replacement of qualified contractors for the completion of special asset projects. Cocamar will supply one or more qualified contractors and bids to the lender/investor and homeowner. In providing these services, Cocamar will engage in an in-depth review and analysis of the following:
- construction cost to complete
- contractor's licenses, references, insurance and credit reports
Fund Control
Cocamar is the industry expert in construction lending fund control/draw administration. Processing and accounting for all activity relating to draws, budgets, inspections, title review and funds advances is handled thru our construction lending software system. Access to the system is available 24/7, with the most up-to-date draw information. Managing the draw disbursement process allows our clients to concentrate on creating new origination's opportunities.
Construction Lending Fulfillment
Pre Processing
We will input or upload your loan application into the LOS software system, deliver construction disclosures to the Lender and customer, and make initial contact with your borrower.
Processing
Our experienced staff will ensure the proper documentation was gathered at the origination of the loan. We will organize your loan file, review and verify all applicable documents and submit file to the underwriting department. We will clear stips as the appropriate documentation is received. The following functions will be completed during this portion of the process:
- Review Construction Title Policy
- Review Homeowner's/ Flood Insurance
- Order Verifications
- Order Payoff, Survey, etc. other required documents
Underwriting
Our expert underwriting staff will underwrite your construction loans to your specific guidelines and requirements. They will ensure the appraisal meets your standards and run applicable fraud/compliance checks. They will issue an approval letter and request additional information as needed. Once file has been underwritten, Lender will be notified of decision and recommendation for approval by lender. The following functions will be completed during this portion of the process:
- Submit loan to underwriting engine
- Review Construction Project Contract & Budget
- Review Appraisal
- Run additional Third Party (fraud, compliance etc.) checks as required.
- Issue Approval Letter or Adverse Action Letter
- Create Source of Funds Worksheet & Review Final Fee Sheet with Closing
Closing and Funding
The closing of a construction loan is more complex and requires the coordination and review with Underwriting of the calculated amount to be disbursed at time of closing, based on requests for work in place, requested loan amounts, construction holdback amounts, etc. Closing will conduct a review of key documents, such as submitted fee sheets, underwriter submission of source of construction loan funds, title policy, and settlement agent information prior to inputting all pertinent information into the LOS system.
We will coordinate the date/time for closing with you and settlement Agent. A preliminary Final HUD-1 will be submitted by the settlement agent for Cocamar review prior to approval of closing and submission of funding request to lender. We will prepare and send the complete construction closing package to settlement and submit funding request to the lender so that the lender can wire the appropriate amount of funds to the closing on desired closing date. Following the closing, the closing package will be reviewed to ensure accuracy and collection of all pertinent closing documents and forwarded to Post Closing for in-depth closed loan file review.
Post Closing
All loan documentation will be placed in a loan file in the applicable stacking order, to ensure that imaging and auditing of files adhere to internal, lender/client standards. On-going maintenance of tracking reports will be performed to ensure the follow up with settlement agents of any missing documentation and the receipt of trailing documents.
Draw Inspections
When a draw request is received by Cocamar, the inspector is asked to complete a comprehensive inspection report to confirm the work completed. The inspector completes the report, indicating the percentage of completion per line item or stage of completion and the budget remaining for that stage. Each report includes detailed photographs. Upon receipt of the original report, photos, and invoices which are uploaded online from the field, Cocamar performs a quality control review on the report. Cocamar evaluates and confirms that each field inspector assigned to a job is licensed, certified or has adequate construction inspection experience.
Rollover to Permanent
Upon completion of the project and the review of all final draw documentation, the loan file is ready for processing and conversion or change from a construction loan to permanent loan status. Cocamar works with the lender and contractor to deliver a completed project on time, within the budget and free of any mechanics' liens. Cocamar also oversees the final inspection and draw in accordance with state specific procedures based on each state's lien laws.
Cocamar's process also includes a review of permanent loan documents and ensures that the permanent loan is sale-able in the secondary market.
Loan Modifications
Depending on the client’s construction loan program, the modification process may encompass the modification of the construction project term and remaining loan amortization period and/or the modification of the interest rate if a “floatdown” interest option is offered by the Lender. Cocamar will work with lenders and borrowers to ensure that modifications to plans, budgets and documents have been proposed, approved and executed, additional fees have been collected (as directed by lender) and settlement agent representation is available to ensure proper execution and recording of the modified documents. In addition, all pertinent loan modifications are subsequently recorded in our construction portfolio management system.
Portfolio Due Diligence Review and Services
Cocamar will conduct an in-depth review of your portfolio to identify potential risks and red flags. Diligence services include a complete review of all loans with inactivity, budget and disbursement variances, inspection reports, asset valuations, loan maturity and saleability of loans to the secondary markets. Cocamar will identify potential problem loans and provide management with an Executive Summary to assist in the risk rating process. Our team of construction experts, working with Cocamar's web-based ordering solution, will verify that all construction mortgage instruments have been executed and recorded in accordance with term and conditions of the credit facility, confirm recorded and released liens and validation of building permits to ensure risk mitigation.